Individual Voluntary Agreement (IVA)


How to start an IVA

IVA Advice


Bankruptcy or IVA

How IVA works

IVA Approval Process

An Individual Voluntary Arrangement (IVA) is an alternative to Bankruptcy, introduced by the Government as part of the Insolvency Act 1986. It enables an individual in debt (debtor) to make a proposal to the people they owe money to (creditors) to reach a settlement. Should the proposal be approved by the requisite majority of the creditors (currently 75% in value), the IVA then stands as a contract that binds all notified parties.

A standard IVA will offer to pay whatever is negotiated as being affordable into a fund on a monthly basis, over typically a three to five year period in full and final settlement. This can be the case even if the creditors agree to receiving less than 30% of their debts repaid. Monthly payments into an IVA can be as little as £250 per month. Payments are based on what an individual or household can actually afford and are normally over £300-400, but still tends to be significantly less than the existing minimum payments on credit cards and loans and you are drawing a line under the debt owed. Also typically, during the period of an approved IVA the creditors are required to freeze all interest on the debts.

IVAs are becoming an increasingly popular choice for the over-indebted in the UK. Global through its associate business partners, specialise in advising on, setting up and organising the supervising of IVAs and are in partnership with many of the UK’s leading Insolvency Practitioners and organisations.

How it works

The IVA was designed initially to be a more convenient means for processing individual insolvency cases without incurring the excessive costs and court time involved in bankruptcy. As such there are many elements that are similar to bankruptcy, but the process can be made simple and the outcome less severe.

The application and set up process takes around 4-6 weeks from the point of application, including activities such as fact finding, collection of evidence, drafting the IVA proposal, reviewing and signing, sending to creditors, and voting. The most professional organisations will do the majority of the work themselves and will only require the debtors for minor activities such as providing evidence and reviewing and signing the documentation.

The resulting proposed IVA will be based on what the debtor can realistically afford to pay over the agreed period. Normally it will be made up of monthly payments at an agreed level, however, it can also include lump sum contributions from, for example, a release of equity from a property, or from friends or family members.

The approval of an IVA is dependent on receiving a 75% majority in value of approving votes from the creditors. Most lenders have standard terms for what they will accept, including normally a reduction in the overall level of debt by as much as 75%. Most good insolvency practices are quite familiar with these terms.

Once approved a standard IVA will run for a three (36 month) to five year (60 month) period. During this period payments are made on a monthly basis into a fund that the Insolvency Practitioner governs. The funds that accumulate in this account are used to pay a dividend to the creditors. A portion of this fund can also be used to pay the fees of the Supervisor.

The payments into the fund are supervised by a licensed Insolvency Practitioner and typically, there is a full review of the debtor’s situation every twelve months.

At the end of the agreed period, assuming that the IVA has been satisfactorily completed, the debtor will be free of the binding debts.

When is it suitable

An IVA is suitable when someone is unable to pay off their debts but does not want to file for bankruptcy. It can be an attractive option to all parties including the creditors as often it presents for them a better result than under bankruptcy.

There are certain criteria however that is required for an IVA to have a good chance of success. It is recommended that a debtor speaks to an advisor to get a better understanding of what these are. The following are some simple guidelines:

  • Minimum unsecured debt of around £15,000.00 (no maximum) 
  • Minimum monthly payments of £250-300. (no maximum) 
  • Stable monthly income. 

Pros and Cons (compared to other debt settlement approaches)



  • Monthly payment is affordable
  • Avoid bankruptcy
  • Keep house and car
  • Interest payments frozen by law
  • Legal action stopped by law
  • Reduce debt by up to 75%
  • Debts cleared in three to five years
  • IVA proposal is gives more control to the individual
  • No more borrowing allowed during the IVA period
  • Impact on credit rating can make it difficult to borrow for a further year after the IVA
  • Default on an IVA could result in bankruptcy proceedings


What to look out for

  • Companies who are trying to be pushy about selling IVAs. Watch out for advertisements that offer to reduce debts before knowing more about an individual’s situation.  (take independent advice)
  • Total contributions into an IVA tend to be more than under bankruptcy. However there are other implications of bankruptcy. Make sure that the difference between an IVA and bankruptcy is fully understood.
  • Be careful not to continue to build up other types of debt such as credit cards and overdrafts. Some organisations suggest cutting up credit cards until the consolidation loan is paid off. 

It’s hard to think straight when you’ve got a serious debt problem. You’re stressed, you can’t sleep, people constantly hound you for money and the temptation is to bury your head in the sand. What you need is honest, independent and cost-free advice on the best way of becoming debt-free.

Contact us today for a confidential talk. We’ll show you a positive way forward. To speak to an adviser, who will call you to discuss your specific requirements. Please click onto the contact form and one of our experts will call you back.

Click HERE to submit your details via our contact form and put the benefits of asset finance to work in your business.